How to Save for a House

Saving for a house means taking control of your finances.

The idea of buying your dream home might seem more like a wishful fantasy if you have no clue how you will stash away enough money to make it a reality. If you are worried about saving up enough to buy a home, you aren’t alone. Coming up with the money for a down payment is one of the most intimidating—and scary—factors for people who hope to become homeowners. The good news: there are some great strategies to help you save for a house.

Simple Ways to Save Up Money for a House

Track your spending and expenses.
This is the something you should be doing anyway. Use an app or online tool that tracks your spending and keeps a running total of the amounts you spend on specific items or categories. Tip: it’s easier to track spending if you use plastic for everything. Most people find this process quite eye-opening, as it’s easy to lose track of a how much you spend on frivolous purchases or small items throughout the week. But spending even a few dollars at a time on luxuries or convenience items can really add up.  Finding out where your money goes is the first step in figuring out how to keep more of it in the bank.

Make a budget—and stick to it.
Once you evaluate your spending, you will likely spot places where you can cut back or eliminate extras. This may be challenging—sticking to a strict budget often isn’t a lot of fun. But just keep focusing on your end goal. Some belt-tightening now is a minor sacrifice that will quickly be forgotten when you are getting the keys to your new home. If you suspect you will feel really deprived or get discouraged, work a few small yet rewarding “splurges” into your budget to keep your spirits up—but see if you can cancel out the costs of these small treats by saving an equivalent amount elsewhere in your budget.

Be a deal hunter and savvy consumer.
You’re tracking everyday spending, but don’t overlook those recurring monthly expenses, too. Put those monthly bills under a microscope. There’s a good chance you are paying for services and features you don’t really need. Call your service providers, credit card companies and other businesses you pay every month and see if they can lower your rate or offer you a better deal.

Keep your down payment fund on lockdown.
When you are saving up to buy a home, that savings account should be considered untouchable. Barring a major emergency, don’t even toy with the idea of spending any of that money until you are ready to purchase a home. It’s easier to keep an off-limits down payment fund if you set up a separate account dedicated solely to this purpose. Think of this account as being a one-way street: funds should go in, but never come out—at least, not until you are ready to write out that down payment check.

Look for ways to boost your income.
Your budget consists of two parts: money coming in, and money going out. You’ll get the best results if you make improvements on both sides. See if there are opportunities to work extra hours. You may even want to consider a part-time job. Think about skills or talents that you could parlay into freelance income.

Exactly how much will it take to buy the home of your dreams? Give me a call 586.907.1206

First-Time Home Buyers Learn to Move Quickly in Tight Markets

Rising home prices and a slim supply of starter homes in many areas are making this spring a challenging one for first-time buyers, real estate professionals say.

The typical price of a previously owned home in March was about $250,000, up nearly 6 percent from a year earlier, according to the National Association of Realtors. The median price was higher in certain parts of the country, particularly in the Northeast and the West.

And, homes sell quickly when they come on the market — especially smaller, lower-priced homes. Seasonal demand is increasing as usual, but buyers are finding that there is a lack of new listings. Homes are going under contract in about a month, the association reported, about four days faster than last year.

“The starter house is nearly missing in some markets,” said Jessica Lautz, the association’s managing director of survey research and communication.Much new construction is aimed at more affluent buyers. And, investors — both professional and amateur — are turning to single-family homes as rental properties to diversify their holdings, creating more competition for traditional buyers when houses come on the market, said Danny Gardner, senior vice president of affordable lending and access to credit at Freddie Mac. Freddie is one of two (along with Fannie Mae) big government-controlled mortgage finance companies.

Competition for all homes in general was particularly cutthroat in some areas, especially in Western markets like San Francisco and other California cities, along with parts of Texas and Colorado, according to Realtor.com, a listing website. The website also cites Boston as a “hot” market.In Colorado Springs, Jay Gupta, a real estate agent, described an “unprecedented” imbalance between the supply of homes and the demand for them. Prices in Colorado Springs are rising, in part because buyers priced out of already costly areas like Denver and Boulder are seeking places that are relatively affordable, brokers say.

In April, Mr. Gupta said, the Colorado Springs market had 1,524 active listings, and ended the month with 1,286 sales. Properties selling for less than $225,000 are in extremely short supply, he said: “Those homes just aren’t there.”Recently, Mr. Gupta said, a home was listed for $310,000. Forty people attended a three-hour open house, and the property went under contract to a buyer offering $30,000 over the asking price. The buyer, who was relocating from out of state, apparently grew tired of seeing his offers on other houses get declined, Mr. Gupta said.

In addition to daunting bidding wars in some markets, first-time buyers often have trouble coming up with a down payment.

Based on the median home price, a down payment of 20 percent — a longtime rule of thumb — would be more than $50,000. Amassing that much cash can be difficult. The average savings of people who do not own homes was $5,200 in 2016, according to the Realtors association, citing Federal Reserve data.

In reality, however, many home buyers make much smaller down payments. More than half of first-time buyers made down payments of 6 percent or less in the 12 months ending in November 2017, according to survey datThe notion that a 20 percent down payment is required is increasingly a “myth,” said Mr. Gardner of Freddie Mac.

Both Freddie and Fannie, as they are known, support home loans to eligible buyers who put down as little as 3 percent. (The companies do not directly make home loans, but buy mortgages meeting their standards and package them as securities).

Freddie Mac said it would soon expand its low down payment program to broaden the pool of buyers who can qualify. The updated program, to become available this summer, will serve first-time borrowers regardless of income.

Fannie Mae was already offering its low down payment program to a broad pool of borrowers, said Jonathan Lawless, vice president of product development and affordable house are some questions and answers about home buying in a seller’s market:

Should I put 20 percent down on a home, if I can afford it?

Making a 20 percent down payment is still a sound strategy, if you can swing it. You will usually qualify for a lower interest rate on your mortgage, and you will avoid paying for private mortgage insurance, which adds to the cost of your monthly payment.

And, in hot markets where sellers can choose from several bids, a larger down payment makes you a more attractive buyer, said Kelly Moye, a broker with ReMax and a spokeswoman for the Colorado Association of Realtors. In bidding wars, she said, “the ones with the biggest down payments usually win,” because they are seen as safer buyers more likely to close the deal.

Some states and nonprofit organizations offer help with down payments. You can search online for programs to see if you’re eligible.

How can I increase my chances of getting the home I want?

Shoppers should get preapproved for a loan and know what they are looking for in a home, so they are prepared to act quickly if they find one they like, Mr. Gupta said. In hot markets, you do not have time to ponder your options. Make a list of two or three “must haves,” he said — whether it’s a big yard or a nice view — and make those the priority so you can move fast when the opportunity arises. “You have to be more flexible,” he said.

What are current mortgage rates?

The average rate on a 30-year, fixed-rate mortgage was4.55 percent as of Thursday, unchanged from a week earlier, according to Freddie Mac’s rate survey.

Consolidate debt using your home

If you have multiple forms of debt, you may have high interest rates and be paying more than necessary. With a debt consolidation loan, you may be able to eliminate high interest debt by making one low payment a month. Your home equity can be a great way to consolidate debt.

Taking control of your credit cards, auto loans and other debts is a great feeling. Use your home equity for debt consolidation to enjoy low fixed interest and just one simple payment every month. You may want to consolidate debt in order to:

Pay less each month

Lower your monthly payment and get a lower interest rate.

Make one simple payment

Combine high-interest debts into one fixed payment each month.

Have peace of mind

See how great it feels to simplify your life and get on the path to a brighter future by managing your debts.

3 Reasons Millennial Buyers Love VA Loans

Millennial veterans and military members are helping fuel the resurgence of the historic VA loan program. Last year’s 700,000-plus loans were more than double the agency’s total from five years ago.

Younger buyers in particular have flocked to these government-backed mortgages during a time of tight credit and flatlining wage growth. The VA says millennials accounted for about a third of all VA loans last year.

These low-interest loans offer qualified buyers a wealth of benefits. That’s especially true for millennial borrowers, who often have dented credit or minimal savings. This $0 down payment loan program was created to help level the playing field for those who serve our country, and it’s still doing so today.

“VA loans offer an extraordinary opportunity for veterans because of lower interest rates, lower monthly payments, no or low down payments, and no private mortgage insurance,” said Jeff London, director of the VA home loan program.

Here’s a closer look at three of the big benefits that make VA loans such a good match for millennial home buyers.

1. No down payment requirement

This renowned benefit of VA loans helps veterans purchase without having to spend years saving for a down payment. When determining affordability, qualified buyers in most of the country should know that they can purchase a home for up to $424,100 before having to factor in a down payment. That ceiling is even higher in costlier housing markets.

The average VA loan last year was for about $253,000. Getting a conventional loan for that amount often requires a down payment of at least $12,000. FHA loans require at least 3.5% down. That’s no small sum in either case, particularly for younger veterans and military families.

2. No mortgage insurance

VA buyers also don’t have to pay extra each month for mortgage insurance, a common feature of low-down-payment loans. Conventional buyers typically need to pay for private mortgage insurance unless they can put down 20%. FHA loans come with both upfront and annual mortgage insurance premiums.

For example, FHA buyers shell out an additional $140 per month for mortgage insurance on a typical $200,000 loan. That extra outlay can limit your purchasing power, as well as put a hole in your monthly budget.

Most VA buyers encounter a funding fee that goes straight to the Department of Veterans Affairs. Veterans and military members can finance this cost over the life of their loan. Borrowers who receive compensation for a service-connected disability don’t pay it at all.

3. Flexible credit guidelines

VA loans were created to boost access to homeownership for veteran and military families. They’re naturally more flexible and forgiving when it comes to credit underwriting.

Lenders typically have lower credit score benchmarks for VA loans than for conventional mortgages. The average FICO score on a VA purchase last year was 50 points lower than the average conventional score, according to Ellie Mae.

Compared with conventional borrowers, qualified VA buyers can also bounce back faster after a bankruptcy, foreclosure, or short sale.

Despite their flexibility, VA loans have had the lowest foreclosure rate on the market for most of the past nine years. That’s due in large part to the VA’s commitment to helping veterans keep their homes.

Loan program officials can advocate on behalf of veteran homeowners and encourage lenders and mortgage servicers to offer alternatives to foreclosure.

“VA is even there to assist veterans who encounter difficulty making payments,” London said. “Last year, VA and servicers helped over 97,000 veterans avoid foreclosure. Using the VA program is a win for veterans, lenders, and taxpayers.”

More than seven decades after their introduction, VA loans are still making a big difference for veterans, military members, and their families.

“A home and its equity becomes the bedrock of their economic future,” said Curtis L. Coy, deputy undersecretary for economic opportunity at the Department of Veterans Affairs. “Money that would have typically been used for the down payment is now money in their pocket—money that can be the beginning of their savings or can be used to fix up their home.  It is a win-win for the veteran and the community where they spend that money.”

Gallup Park Canoe Livery trip

As my closest colleagues, family, and dear friends know; it’s my birthday tomorrow. For the celebration today a group of us went Kayaking. Being my first adventure in the Huron River I wasn’t sure what to expect. There were Rapids, a nice current, and a place for people to lay out in the sun. The journey was a 6.5 mile trip down the Huron River. As were Kayaking about halfway through these Canadian geese started heading towards ya head on. Grabbing my Ore because I was expecting a tussle with these things. My buddies fiancé did the same thing but started trying to paddle faster ended up hitting me in the noggin. Best part was that they ended up being friendly geese; but still, scary!! Not sure if I have a slight headache from the heat or the noggin knocking I received lol